biolink Legal Column – May 2014

“I can’t believe they got a patent on that!” If that resonates with you, and the issue of the patent’s enforceability is important to you or your business, the America Invents Act (AIA) provides an alternative method to challenge such a patent outside of a federal court lawsuit.

Under current law, one cannot file a lawsuit in federal court to challenge only the validity of an issued U.S. patent. Instead, the validity issue must be considered along with the question of patent infringement in a lawsuit brought by the patent owner, or in a declaratory judgment action filed by one seeking a finding that his or her conduct does not infringe the patent in question. In such cases, the question of the patent’s validity often becomes mired in the complexity, delay, and significant expense found in many patent lawsuits in federal court.

By comparison, inter partes review (IPR) is a new proceeding under the AIA which is conducted not in a federal courtroom, but instead before the Patent Trial and Appeal Board (PTAB) at the U.S. Patent and Trademark Office (USPTO). IPR is intended to streamline the process for evaluating a patent’s validity on certain specific grounds and to mitigate the expense and delay in determining the issue in other forums.

In an IPR proceeding, the PTAB may review the patentability of claims in any patent on any ground that could be raised under §§ 102 or 103 of the U.S. Patent Act, that is, on grounds of “anticipation” or “obviousness.” In IPR, the prior art that the PTAB may consider consists of patents or printed publications, and is limited to those sources.

The IPR process begins with a petition requesting review after the later of: (1) 9 months after the grant of the patent or issuance of a reissue patent; or (2) if a post-grant review is instituted, the termination of the post-grant review. Any person who: (1) is not the patent owner and (2) has not previously filed a federal court action challenging the validity of a claim of the patent, may petition for inter partes review of the patent. However, a person may not file a petition for IPR more than one year after that person, or a privy or real party in interest, was first served with a related complaint in a federal patent lawsuit.

Jonathan P. O'Brien

The petition must meet statutory requirements, including among them: (i) identifying all real parties in interest; (ii) identifying all claims challenged and all grounds on which the challenge to each claim is based; and (iii) providing copies of evidence relied upon. The petition must be accompanied by a fee, as set by the USPTO. In addition, by rule, the petitioner must: (i) identify the grounds for standing; (ii) provide a claim construction for each challenged claim; (iii) specifically explain the grounds for unpatentability; and (iv) specifically explain the relevance of evidence relied upon. The patent owner may, but is not required to, file a preliminary response to the petition within three months after the petition is filed.

In deciding whether to grant the petition, the PTAB will determine whether there is a reasonable likelihood that the petitioner would prevail with respect to at least one of the challenged claims. If the petition is granted, an IPR proceeding is instituted, during which the PTAB may in its discretion allow the petitioner to supplement the petition, and the patent owner responds and may in some instances be allowed to amend the challenged claims. The rules governing IPR contemplate some discovery between the parties, as some examples, document discovery and possible depositions of persons who offer declarations, such as expert witnesses. However, it is expected that the discovery will not be of the same magnitude and expense as discovery in federal court patent litigation. A party may request an oral hearing before the PTAB, and technology tutorials may be offered. After the close of evidence, the PTAB issues a decision on whether or not to cancel the challenged patent claims. IPR is intended to be expeditious and efficient; the rules provide that the PTAB will make a final determination within one year, extendible by six months only for good cause.

The use of IPR is growing rapidly. IPR first became available in September 2012. According to USPTO statistics, 17 IPR petitions were filed in 2012, followed by 834 petitions between January 1, 2013 and January 30, 2014, with petition grant rates of about 87.2 % in 2013 and about 77.2 % in 2014. 268 IPR trials were instituted during the same time period, resulting so far in 81 settlements between the parties and 15 final written decisions. These data show that IPR is of growing interest as an alternative for determining the validity of a patent.

The costs of IPR tend to be front-loaded because the IPR petition must set out the petitioner’s case and evidence of unpatentability. Nonetheless, reports to date indicate that the costs of pursuing unpatentability in IPR are far less than the cost of litigating the issue in a federal court patent case.

There are important strategic considerations to assess when deciding whether or not to petition for IPR. As some examples, the standard currently used by the PTAB to construe patent claims in an IPR is the “broadest reasonable interpretation” standard, which differs from the standard used in federal court patent litigation and may broaden the pool of applicable prior art. In addition, in IPR, the petitioner may prove invalidity by the “preponderance of the evidence” standard, rather than the higher “clear and convincing evidence” standard used in federal court. It is also important to consider the estoppel effect of IPR. A petitioner in an IPR which results in a final written decision may be estopped in a federal district court action or other proceeding from asserting patent invalidity on grounds that were raised, or reasonably could have been raised, against any patent claim in the IPR. Thus, in conjunction with his or her patent counsel, one deciding whether or not to petition for IPR must carefully evaluate the strength of the patent claims at issue, the strength of the prior art at hand, and the applicable strategic business and legal context.

Nonetheless, IPR is a potentially useful, new tool to assist those for whom the issue of a patent’s validity is significant in their work or business.

Jim Kamp is a partner and registered patent attorney with Honigman Miller Schwartz and Cohn LLP (www.honigman.com), where he practices IP litigation and patent prosecution in biotechnology/life sciences and other areas. Jim can be reached at 248.566.8408 or JKamp@honigman.com. Jonathan O’Brien, Ph.D., is the chair of Honigman’s IP Department and leads the firm’s Patent Practice Group. His practice focuses primarily on life science, providing clients with global IP strategies related to IP procurement and enforcement, product clearance, and various transactional and regulatory issues. Jonathan can be reached at 269.337.7704 or at JObrien@honigman.com.